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VUG vs. VO: What’s The Difference?

The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard Mid-Cap Index Fund ETF Shares (VO) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and VO is a Vanguard Mid-Cap Blend fund. So, what’s the difference between VUG and VO? And which fund is better?

VUG and VO have the same expense ratio: 0.04%. VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than VO over the past ten years.

In this article, we’ll compare VUG vs. VO. We’ll look at fund composition and performance, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss VUG’s and VO’s annual returns, industry exposure, and holdings and examine how these affect their overall returns.

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Summary

VUGVO
NameVanguard Growth Index Fund ETF SharesVanguard Mid-Cap Index Fund ETF Shares
CategoryLarge GrowthMid-Cap Blend
IssuerVanguardVanguard
AUM165.53B154.08B
Avg. Return17.58%14.34%
Div. Yield0.57%1.23%
Expense Ratio0.04%0.04%

The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% with an expense ratio of 0.04%.

The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.

VUG’s dividend yield is 0.66% lower than that of VO (0.57% vs. 1.23%). Also, VUG yielded on average 3.24% more per year over the past decade (17.58% vs. 14.34%). VUG and VO have the same expense ratio: 0.04%.

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Fund Composition

Industry Exposure

VUG vs. VO - Industry Exposure

VUGVO
Technology39.05%22.01%
Industrials5.13%11.92%
Energy0.32%3.82%
Communication Services16.49%5.61%
Utilities0.0%5.12%
Healthcare8.09%13.03%
Consumer Defensive2.41%3.25%
Real Estate2.46%8.67%
Financial Services6.75%11.08%
Consumer Cyclical17.78%12.12%
Basic Materials1.52%3.36%

The Vanguard Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.

VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.

VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.

VUG is 17.04% more exposed to the Technology sector than VO (39.05% vs 22.01%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 5.66% higher and 10.88% higher respectively (17.78% vs. 12.12% and 16.49% vs. 5.61%). In total, Energy, Basic Materials, and Consumer Defensive also make up 6.18% less of the fund’s holdings compared to VO (4.25% vs. 10.43%).

Holdings

VUG - Holdings

VUG HoldingsWeight
Apple Inc10.13%
Microsoft Corp9.52%
Amazon.com Inc6.88%
Facebook Inc Class A3.89%
Alphabet Inc Class A3.43%
Alphabet Inc Class C3.22%
Tesla Inc2.44%
NVIDIA Corp2.21%
Visa Inc Class A1.78%
PayPal Holdings Inc1.6%

VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.

Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.

VO - Holdings

VO HoldingsWeight
IDEXX Laboratories Inc0.78%
DocuSign Inc0.75%
Marvell Technology Inc0.68%
IQVIA Holdings Inc0.68%
Chipotle Mexican Grill Inc0.63%
Veeva Systems Inc Class A0.62%
Digital Realty Trust Inc0.62%
Centene Corp0.62%
Aptiv PLC0.62%
Carrier Global Corp Ordinary Shares0.61%

VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.

Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.

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Risk Analysis

VUGVO
Mean Return1.441.14
R-squared92.4892.22
Std. Deviation14.7615.65
Alpha1.81-2.71
Beta1.041.11
Sharpe Ratio1.130.83
Treynor Ratio16.1311.32

The Vanguard Growth Index Fund ETF Shares (VUG) has a Alpha of 1.81 with a Beta of 1.04 and a Treynor Ratio of 16.13. Its Standard Deviation is 14.76 while VUG’s R-squared is 92.48. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Mean Return of 1.44.

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Mean Return of 1.14 with a Beta of 1.11 and a Alpha of -2.71. Its Treynor Ratio is 11.32 while VO’s Standard Deviation is 15.65. Furthermore, the fund has a Sharpe Ratio of 0.83 and a R-squared of 92.22.

VUG’s Mean Return is 0.30 points higher than that of VO and its R-squared is 0.26 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than VO. The Alpha and Beta of VUG are 4.52 points higher and 0.07 points lower than VO’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. VO - Annual Returns

YearVUGVO
202040.16%18.22%
201937.26%31.04%
2018-3.32%-9.21%
201727.8%19.25%
20166.13%11.23%
20153.32%-1.34%
201413.62%13.76%
201332.38%35.15%
201217.03%15.98%
20111.87%-1.96%
201017.11%25.57%

VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% respectively.

The year 2013 was the strongest year for VO, returning 35.15% on an annual basis. The poorest year for VO in the last ten years was 2018, with a yield of -9.21%. Most years the Vanguard Mid-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2012, and 2020, when gains were 13.76%, 15.98%, and 18.22% respectively.

Portfolio Growth

VUG vs. VO - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VUG$10,000$54,73517.58%
VO$10,000$40,40414.34%

A $10,000 investment in VUG would have resulted in a final balance of $54,735. This is a profit of $44,735 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.58%.

With a $10,000 investment in VO, the end total would have been $40,404. This equates to a $30,404 profit over 11 years and a compound annual growth rate (CAGR) of 14.34%.

VUG’s CAGR is 3.24 percentage points higher than that of VO and as a result, would have yielded $14,331 more on a $10,000 investment. Thus, VUG outperformed VO by 3.24% annually.


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